Many Who Saw Property Taxes Fall Face a Jolt

The owners of 129,300 properties in Los Angeles County who got tax breaks when real estate prices plunged earlier this decade are about to experience an unpleasant byproduct of today’s rebounding market.

Prices are rising, and so will their property taxes.

The county assessor conducted a review this spring of the 366,000 parcels whose owners successfully petitioned for tax reductions in the years after prices began their plunge in 1990. County appraisers found that about 35% of those properties have increased in value by a total of nearly $9 billion in the last year.

“Naturally, people do not like to see their taxes raised,” said Assessor Kenneth P. Hahn.

The large number of owners whose taxes will rise testifies to the area’s recovery from the recession.

By comparison, last year the county assessor reviewed 362,000 parcels whose owners had previously received tax reductions, and raised levies on only 3,700 of them.

Letters informing property owners of tax changes started arriving Tuesday, the assessor’s office said. All notices should be received by June 28.

When California voters approved Proposition 13 in 1978, they were guaranteed that taxable value would rise annually at no more than 2% of a property’s so-called base value--its purchase price or construction cost, plus the value of any improvements to the property. In the same year, voters passed Proposition 8, which allowed owners to petition for a tax reduction if their property value dropped below that base figure.

Homeowners given Proposition 8 cuts were told that their tax breaks were only temporary. “But of course people forget that,” said Assistant Assessor Rick Auerbach.

Many property owners may be startled to see tax increases this year that are well above the 2% limit of Proposition 13.

If a homeowner got a 10% tax break under Proposition 8, for example, and the home has now regained its former worth, the homeowner should expect a 10% tax hike, Auerbach said.

The new assessments are based on the estimated value of the properties on Jan. 1. Auerbach said that about 30,000 parcels in the county have fully recovered from the real estate doldrums. Their value is at least equal to their base figure plus the annual maximum 2% increases allowed under Proposition 13, he said. Slightly fewer than 100,000 parcels have partially recovered their value.

An additional 50,300 of the Proposition 8 parcels reviewed this spring lost a total value of $1.6 billion. Owners of those parcels will get a new round of tax breaks. Most of these properties are in High Desert cities, such as Lancaster and Palmdale, officials said, where values have been slow to recover.

There are 2.3 million parcels of land in Los Angeles County, worth $503 billion last year. All told, the net increase in assessed value in the county is $7.1 billion. Auerbach said that will produce an extra $71 million in property taxes.

“I think in general we’re going to see values continue to rise, and we will see few if any where the value is reduced,” Auerbach said.

According to the assessor’s review, the average increase in value for single-family homes given tax breaks under Proposition 8--among those that did rise--was $55,600 over the last year.

Proposition 8 filings spiked in 1996, Auerbach said, with about 99,000 people applying for tax reductions. Of those, 71,500 received them. In 1998, taxpayers filed 27,000 applications for such tax relief, and in 1999 the number dropped to just 7,600. (The 1999 deadline for filing was March 15.)

Other Southern California counties are still compiling Proposition 8 assessments.

A review of 250,000 Orange County parcels whose taxes have been reduced under Proposition 8 will be completed by early July, said Orange County Assessor Webster Guillory. He would not speculate on how many property owners would see bigger tax bills this year.

“The increase in property values in Orange County is very spotty,” he said. “As you are closer to the coast, there are increases, and some are significant.”

Last year, Orange County officials found that more than 15,000 Proposition 8 parcels warranted tax hikes.

David Montgomery, a system administrator for the Riverside County assessor’s office, said he expects about 15% of the county’s nearly 217,000 Proposition 8 parcels to reflect an increase in value. Property owners can expect to learn of the increases when notices are mailed in mid-July.

San Bernardino County has not begun its review yet, but Assistant Assessor Linda Foster said the county will probably not see a dramatic change in values. A recent study showed that Twentynine Palms, Grand Terrace and San Bernardino, for example, are still seeing values drop, she said.

But in Ventura County, Assessor Dan Goodwin estimated that 30% to 40% of the about 70,000 Proposition 8 properties will see higher taxes this year. Notices will go out in mid-July.

Los Angeles County taxpayers can contest the hikes by calling the assessor’s office within 15 days of receiving their notice, Hahn said. If the disagreement can’t be resolved, owners can take their cases to the county assessment appeal board from July 2 to Sept. 15.

Homeowners are wise to be prompt. Tax bills do not arrive until October. Thus, by the time homeowners get the bills, it will be too late to appeal.

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Times staff writer Julie Ha contributed to this story.

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Assessing Higher Home Values’ Effect

Many Los Angeles County property owners who got tax reductions when real estate prices dropped earlier this decade should expect to receive higher tax bills this year because of rising home values. In the following example, a resident purchased a Culver City home in 1990 for $370,000. Then the home dropped in value and the homeowner applied for and received Prop. 8 tax relief. The home’s value rose this year, so the homeowner’s tax will increase. Here’s what the owner can expect on this year’s tax bill:

1998 assessed value: $250,000

1998 approx. property tax bill: $2,500

1999 assessed value: $300,000

1999 approx. property tax bill: $3,000

What the increase in assessed values means to the county’s big picture:

$7.1-billion net increase in value of the Prop. 8 parcels

$71 million in new tax proceeds

* 45%, or nearly $32 million, goes to schools

* 25%, or nearly $18 million, goes to county government

* 30%, or more than $21 million, goes to cities and special districts